A federal grand jury indicted a Texas corporation and two of its top executives Thursday with conspiracy to defraud the U.S. Postal Service in the procurement of optical reading equipment to sort the mail.
The seven-count indictment charged Recognition Equipment Inc. of Irving, Texas, William Moore Jr., 49, of Dallas, the chairman of the board and chief executive officer of REI, and Robert Reedy, 46, also of Dallas, vice president of marketing for REI, with conspiracy to defraud the Postal Service, theft, receiving stolen property and mail and wire fraud."This indictment represents our commitment to prosecute aggressively and vigorously those who seek to strike at the heart of fairness in the procurement process by corrupting the machinery of government for personal financial gain," said U.S. Attorney Jay Stephens.
The indictment charges that REI, Moore and Reedy conspired to obtain $400 million in postal contracts for the procurement of optical character reading equipment to sort the mail. According to the indictment, the defendants conspired to defraud the Postal Service by seeking to place officials sympathetic to their bids within the Postal Service's Board of Governors.
It also charged REI, Moore and Reedy with the theft of materials presented to the Postal Service and to members of the Board of Governors by a company competing with REI for Postal Service contracts, with receiving the stolen information and with using the mails and interstate wire to further their scheme to defraud the Postal Service and REI's competitors.
If convicted, REI faces fines in excess of $3 million. Moore and Reedy, if convicted on all charges, each face possible prison terms of 33 years and fines of more than $1.5 million.
The indictment is a combination of a three-year investigation into procurement fraud and corruption at the Postal Service.
Peter Voss, former vice chairman of the Board of Governors, pleaded guilty in 1986 to charges of theft and acceptance of gratuities in connection with Postal Service contracts. John Gnau Jr., a Michigan public relations executive, also pleaded guilty in 1986 to conspiracy to defraud the Postal Service and to paying illegal gratuities to Voss.
According to sources familiar with the case, Gnau was the link between Voss and REI. The company tried to use insider information to its advantage, including attempts to eliminate certain employees and to replace them with individuals who would be sympathetic to their interest.